Cyprus President Nicos Anastasiades, has threatened to step down in the middle of vital negotiations to rescue the country from bankruptcy. Meanwhile, banks have cut ATM withdrawals to 120 euros per day.
After an interminable meeting in Brussels with the troika - the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Union (EU) - Cyprus President Anastasiades said he felt the unsuccessful negotiations were leaving him no options to help his country.
"I make you one proposal - you say no. I propose you another proposal and you say no - what more do you want? Do you want me to resign? Then just say it," state broadcaster RIK quoted Anastasiades as saying.
Anastasiades and Cypriot Finance Minister Michalis Sarris began the talks Sunday afternoon which aim to find a solution to an unpopular levy that threatened to take between 6 and 10 percent from Cypriot bank accounts. The funds would have raised the needed 5.8 billion euros ($7.5 billion) to meet international lenders' requirements for securing a bailout.
Cyprus received the original bailout deal, but the proposed "deposit tax" sparked widespread panic and protests in the Mediterranean country.
By Friday, the parliament in Nicosia passed a number of measures aimed at meeting the troika's demands. However, they voted down the bank account levy.
The Reuters news agency quoted an unnamed senior official who said they had agreed to a 20 percent levy on deposits of over 100,000 euros at the country's biggest lender, Bank of Cyprus, and a 4-percent tax on similar account at other financial institutions.
The impasse in Brussels on Sunday reportedly delayed a later meeting scheduled with eurozone finance ministers.
Cyprus bank lowers ATM withdrawals
Meanwhile in Cyprus, the country's central bank imposed a limit of 120 euros per day on withdrawals from cash machines to prevent a run.
Cypriots have been restricted to withdrawing less cash every few days since the bank shutdown began 10 days ago when account holders panicked in reaction to the threat of the "deposit tax."
"Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available," Rehn said in a statement released by his office.
"There are only hard choices left," Rehn said, adding that it was essential for leader to reach an agreement by Sunday night.
Discussions on Saturday were first described by Cypriot Finance Minister Sarris as having made "significant progress." However, government spokesman Christos Stylianides later described them as having entered "very delicate" phase.
The finance minister of Germany, which, as Europe's biggest economy, could be expected to foot the lion's share of the bill, also warned that there was no easy solution for Cyprus.
"The eurozone countries want to help Cyprus, but the rules must be respected, the aid must be relevant and the program must tackle the problems at their root," Wolfgang Schäuble said in comments published in this Sunday's edition of the Welt am Sonntag newspaper.
kms/mkg (AP, AFP, Reuters, dpa)